The US Department of the Treasury is set to announce the private partners that will roll out its new debit card aimed at unbanked consumers that need a place to deposit their tax refunds. Under the pilot, Treasury hopes to add more individuals to their Direct Express platform.
The Treasury Department indicated that this plan was in the works last September. The update is that they will
name the entities that they work with during the current week.
Direct Express Mastercard already allows some recipients a means to receive their federal benefits, but this program would certainly increase the reach of the card. The card is issued by Comerica Bank.
A number of debit card companies have been seeking to get this contract. It would be an incredible opportunity to identify new customers. I spoke with staff at H&R Block about it during the shareholders meeting last fall. They felt that there was a good chance that the contract would go to one of the major banks. I had to agree with them that such an idea made no sense at all. Right now, the big banks are seeking to rid themselves of low-income consumers. They are putting monthly fees or imposing deposit limits on their basic checking accounts.
I believe that the contract will ultimately end up with Green Dot. Green Dot has an established ATM network and plenty of experience with this market. As well, their CEO has promised that his cards will never have a line of credit appended to them.
H&R Block would be a fine choice as well. Given that this program is centered on tax season, Block could argue that they are better suited for the job than anyone else. Block also won't be able to offer refund anticipation loans, so these new cards won't be the next stop for the money that remains from a previously larger refund. Then again, Block has been making some trouble with the OCC lately, and although the OCC is an independent entity, it is still within the Department of the Treasury. If the contract does go to someone else, Block will have to wonder if they picked a fight at the wrong time.
The announcement is planned for Wednesday.